Will smart meters be enough to help us keep the lights on and unlock energy savings in our homes?

As the government prepares to roll out further renewable incentives to encourage an uptake in renewables on a domestic scale in the UK, will the lower costs to householders and the carbon emission cuts that can be achieved by these measures be worth the investment? Or is it too little too late to really have a significant impact and help ensure uninterrupted power supplies while also improving our environmental performance?

In the battle to make our lives more sustainable and slow down the impact of human activities on climate change, microgeneration of energy – when homes, businesses and public sector buildings such as schools and hospitals create their own energy from renewable energy sources like solar, wind, biomass and BIPV (building integrated photovoltaics) – and smart metering have both been lauded as major weapons. But can they really make the kind of difference we need them to?

If you look at what we've achieved so far, you may think not. According to National Grid's Electricity Ten Year Statement (ETYS), published in November 2013, we won't be meeting the 2020 goal laid out in the 2009 Renewable Energy Directive, of having 15 per cent of the UK's energy coming from renewable sources, until sometime between 2020 and 2025.

Embarrassingly, we have one of the lowest shares of renewable energy generation in the EU, ahead of only Malta and Luxembourg, while Estonia, Bulgaria and Sweden have already achieved their 2020 goals. In contrast, in 2012 the UK only generated 4.2 per cent of its energy from renewables, so we definitely have a lot of work to do over the next decade.

Microgeneration was considered by the government to have real potential to make the kind of difference we desperately need to achieve our goals. However, the reality of its implementation, and the government's microgeneration strategy that was released in 2006, haven't yet delivered that potential.

That's not to say that they can't though. Indeed, Adam Hawkes from Imperial College's Centre for Energy Policy and Technology believes that microgeneration can not only live up to that potential, it has to. If the UK is to meet the legally binding obligations set out in the 2008 Climate Change Act, which mean we need to see a whopping 80 per cent reduction in the levels of greenhouse gas emissions by 2050, microgeneration has a vital role to play. Hawkes says: "The energy system has to change radically, including on the demand side where microgeneration comes in."

Small-scale energy resources

For the UK to meet its goals and establish more sustainable and environmentally sound energy sources for the future, Hawkes says that new small-scale energy resources such as micro-CHP (combined heat and power) systems, photovoltaics (PV) and heat pumps are significant tools.

"Installed capacity of PV alone could exceed 20GW by 2050, and thereby make a substantial contribution to UK energy demand. Similarly, it is clear that we cannot continue to heat our buildings in the way that we do now. Heat will need to be decarbonised by the introduction of heat pumps and fuel cell micro-CHP for example."

To have any chance of achieving the many environmental goals we have in place, Hawkes believes that the adoption of millions of microgeneration devices is crucial. "In fact," he says, "it will be impossible to achieve the relevant targets without them.

"While the contribution of each individual system may currently be pretty small, mass markets are envisaged in the not too distant future. When large numbers of installations exist, their impact is material towards our decarbonisation targets, and also offers a range of other opportunities for us to modernise our energy system."

In its UK Future Energy Scenarios report, National Grid has come up with three possible forecasts of how our energy systems can be modernised to make them more sustainable and enable us to achieve greener energy generation: Slow Progress, Gone Green, and Accelerated Growth.

Slow Progress is pretty self explanatory and would see the rate of renewable energy generation staying at its current sluggish level, which means we would be unlikely to achieve the 2020 goals by 2025 either.

In Gone Green everything is on track to achieve the goals for 2020, 2030 and 2050. Seeing as we already know we're going to miss the 2020 target, we've already failed this one. In the Accelerated Growth forecast, we've shot straight to the top of the environmental class and met all of our goals way in advance of the deadlines. Again, this is now impossible to achieve. So, it seems like we're stuck with slow progress.

However, despite the slow start, the UK government is still introducing new schemes and hopefully speeding up to a renewable energy generation jog rather than the dawdle of the past few years.

Renewable Heat Incentive

There are so many different acts, directives,'goals and incentives that it feels more like a scatter gun approach than a well thought out strategic one that could see us achieve significant improvements and lasting change. One of the newer kids on the block is the Renewable Heat Incentive (RHI), a pot of public money that's being spent on encouraging us to change the way we heat our buildings and to get microgenerating.

A joint initiative of the Department of Energy and Climate Change and the Department for Transport, the RHI was issued in 2011 and billed as "the world's first long-term financial support programme for renewable heat". Originally targeted at industry, businesses and public sector organisations, the scheme is now being rolled out to households across the UK.

The government paper, 'Domestic RHI: the first step towards transforming the way we heat our homes', details the financial income that households using oil, LPG or electricity to generate their heat, and which also have the required levels of insulation in place to improve energy efficiency, can earn for the installation of air-source heat pumps, biomass systems, ground source heat pumps and solar thermal technologies.

The payments will be made in arrears, however, over a seven-year period and anyone wanting to take advantage of the RHI will have to stump up the initial money to buy and install a renewable heating system themselves. Using the Biomass Quoter website to generate a quote for transferring a two-bedroom home currently using electric storage heating to a biomass system, a standard system would set you back £6,000 while a deluxe version will cost a cool £10,000.

In these times of austerity that we live in, it's probably safe to assume that there aren't that many households out there that could afford the up-front costs, even with the Green Deal to get money off energy bills, which households will have to as it's an eligibility requirement to qualify for RHI payments.

Assuming there are some takers out there, any household that does install a new renewable heating system can get an additional sum of £230 on top of their RHI payments if they monitor and manage their new green system using a smart meter.

How smart is your meter?

While energy usage has always been metered, now that these meters have got smarter it's turned into a two-way communication system and there's a response to the consumption data the meter generates.

Smart meters not only track how much energy is being used, they analyse that information with the monitoring system to show how, where and when energy is being used and to advise how we can be more energy efficient. The latest plan is that our environmental goals will be achieved by homes of the future microgenerating their own renewable energy and using smart meters to manage it.

Is all of this too little too late for us to really make a difference in our fight to control climate change? Imperial College's Hawkes doesn't think so, saying: "Information is power and smart meters can deliver information. Smart metering provides timely information to the consumer, and also to suppliers of energy services."

It's what energy consumers and suppliers do with this information that will make the smart meter monitoring a worthwhile endeavour. "This information better enables consumers to compare energy consumption and make sensible energy-saving decisions," Hawkes adds. "It enables the supplier to achieve more sensible pricing of energy supplied, and valuation of output from [electric] microgeneration."

The advances won't stop there, though. In the industrial world, smart meters are already being used in conjunction with other technologies to control production lines more efficiently so that energy consumption is cut significantly. This is the way forward for the versions we'll use to manage energy supplies and demands for our homes, too.

Hawkes thinks it likely that "in the future, smart metering may also enable more useful control of the energy system including the ability of more demand resources to participate in electricity system balancing, and other possibilities for system-level control such as arbitrage between energy vectors to reduce infrastructure congestion and increase infrastructure asset use".

What this means, in essence, is that if we can combine microgeneration through renewables with smart metering it can be a useful addition to enable more integrated and coordinated design and control of our energy system. In fact, we are already seeing changes to demand from the National Grid as well as a decline in consumption, which it attributes to a number of factors including "an increase in energy efficiency measures in homes and offices", says Hawkes.

To get it right, Hawkes says we must consider exactly what we need smart meters to deliver so that they can fulfil their potential to help us consume less as well as manage supplies better. "Efforts in rolling out smart meters should consider all the functionality they can offer, which would avoid lock-in to metering systems that only do half the job.

"Finally, trust is a big issue with smart meters. Customers need to be confident they own their data and will continue to have the ability to control energy provision in their homes and businesses."

Energy efficiency improvements

So while our environmental goals can be achieved if we all get these new heating systems in place, it's already been recognised that it will take several decades to get every home, business and public sector building transferred to a renewable heat source. Assuming that we can speed up to that jogging pace, of course.

So what should we be doing in the meantime to start making a difference? We've started out on the right road, but Hawkes believes that we need to learn to walk before we can up the pace to a jog. "While microgeneration and smart metering are definitely important tools, they probably will not be crucial for another five to ten years. In the meantime, households and businesses should be focusing on improving energy efficiency."

So rather than too little, too late, microgeneration and smart metering are the right tools but they need to have the right groundwork laid for them to do their jobs to the best of their ability. How we lay these foundations is through a number of ways that you might think would be common sense, but it seems lots of us don't have it.

Rather than rushing to install our new renewable energy systems and smart meter monitoring systems, we need to drastically improve insulation and air tightness and ensure that our windows are glazed to a high energy efficiency standard.

Appliances such as boilers and white goods should be the highest performing energy efficiency wise, lighting should come from low-energy bulbs, and thermostats should be turned down as much as possible or deadbands (single upper and lower temperature limits for heating and cooling in all areas) increased in larger buildings.

Without first taking these measures and completely changing the majority of the population's mindset as to how they consume energy, the potential that microgeneration and smart meters have to help us achieve our environmental goals will never be reached.

At places of work, it's about thinking beyond just the immediate environment too. Hawkes concludes: "Businesses should consider on-site efficiency, and efficiency in their supply chains; many areas of wastage are simple to address.

"If longer-term investments are to be made, the carbon implications of these should not be neglected, and in the UK policy instruments such as the Renewable Heat Incentive could make investment in low-carbon heat supply attractive."

While the UK's businesses may have capital that they can access to take advantage of the RHI scheme, if the government really does want us to speed up our renewable energy generation then it may have to rethink the domestic RHI roll out and the up-front funding of those systems and installations.

Big energy goals

We need to increase the amount of energy we generate from renewable sources by more than 10 per cent in just over ten years. When you consider the length of time it takes to get new wind and solar farms through the public consultations, then design, build and connection phases, it's obvious that microgeneration is going to have to play a big part in enabling us to achieve that 10 per cent goal within that timescale.

With more than 13 million people in the UK on low incomes, and the unemployment rate still sitting at over 7 per cent, it goes without saying that households such as these are definitely not going to be in a position to invest £6,000 on a standard renewable heating system let alone an all-singing-all-dancing deluxe version that would really deliver impressive energy efficiency improvements.

So while the Renewable Heat Incentive may seem like a great tool to get the UK's households on a greener path, for microgeneration and smart metering to not be too little too late, the government needs to look at introducing yet another initiative that will enable us to install them in the first place.